Recent Changes to Federal Student Loans
With uncertainty around student loan payments and programs caused by recent court rulings, legislation, and agency decisions, it can be difficult to understand what the best path toward repayment is for you.
If you’re a federal student loan borrower currently in repayment, it’s important to know your rights and understand your options.
Recent Changes
Under the budget reconciliation bill signed into law by President Trump on July 4, 2025, several income-driven repayment (IDR) programs will be dissolved.
For loans disbursed or consolidated before July 1, 2026 these plans are being phased out:
- Saving on Valuable Education plan (SAVE, also known as REPAYE)
- Pay As You Earn (PAYE)
- Income-Contingent Repayment (ICR)
If you are enrolled in ICR, PAYE, or SAVE, you must move into one of three new plans by July 1, 2028:
- Repayment Assistance Plan (RAP) – a new plan expected to be available in 2026
- Income Based Repayment (IBR) – a new version without income eligibility requirements that is expected to be available in 2025
- An existing Standard, Graduated, or Extended repayment plan
Be Aware
- For many borrowers, payments under RAP and the new IBR plan will be higher than those under SAVE and PAYE
- The Department of Education may require you to switch plans sooner than 2028
SAVE
If you’re currently enrolled in SAVE, your payments are in forbearance. This is due to a federal court order stopping that program from being implemented.
If you want to leave the SAVE plan to begin making payments, you can apply for another income-driven repayment plan through www.studentaid.gov.
Be Aware
- As of August 1, 2025, interest is accruing on loans in SAVE forbearance
- Months spent in SAVE forbearance will not count toward the 120 required payments for Public Service Loan Forgiveness (PSLF)
What Can I Do Now?
The most important thing you can do to protect your rights is to understand what type of loans you have, the status of your loans, who your loan provider is, and in which payment plan you’re currently enrolled.
Visit www.studentaid.gov to access your Federal Student Aid account. This will provide important information about your loans and your loan provider.
Reach out to your loan provider for infor¬mation about when payment plans will be available.
If you have issues navigating the federal student loan system, you can reach out to the Attorney General’s Student Loan Assistance Unit for help.
Important Federal Student Loan Terms to Know
Default: If you’re in repayment and you haven’t made a payment for more than 270 days, you can be declared to be in default. Being in default can impact your credit score. The federal government can garnish your wages, tax refunds, and social security payments, if you’re in default.
Delinquency: You’re considered to be delinquent one day after a missed payment, but your delinquency can’t be referred to credit agencies until you are more than 90 days behind on payments. While being delinquent on payments can affect your credit rating, the government can’t garnish social security payments or tax refunds until you’re in default.
Forbearance: A forbearance is a temporary pause of student loan payments. Interest typically continues to accrue during forbearance, but you aren’t required to make payments. There are limitations on how many times you can receive a forbearance and how long you can remain in forbearance.
Rehabilitation: If you’re in default, you can pursue loan rehabilitation by contacting the federal government’s Default Resolution Group. Rehabilitation requires that you make at least nine voluntary and reasonable monthly payments over a ten-month period. After rehabilitating your loans, you can apply for an income-driven repayment plan to help you get back on track.
Resources
Federal Student Aid
U.S. Department of Education
www.studentaid.gov
Default Resolution Group
U.S. Department of Education
1-800-621-3115
myeddebt.ed.gov
Student Loan Assistance Unit
Office of the Massachusetts Attorney General
1-888-830-6277
www.mass.gov/student-loan-assistance